Product Development and Product Life Cycle

1. Product Development and Product Life Cycle Session -6

2. Nokia

3. Why Product Development? • Increase sales, Revenue, Competitive advantage.

4. What is Product Development • Development of original products, product improvements, product modifications, and new brands through the firm’s own R & D efforts.

5. New Product Development Strategy • New products can be obtained via acquisition or development. • New products suffer from high failure rates. • Several reasons account for failure.

6. Stages in New Product Development • Stage 1: Idea Generation • Internal idea sources: • R & D • External idea sources: • Customers, competitors, distributors, suppliers

7. Stage 2: Idea Screening • Product development costs increase substantially in later stages so poor ideas must be dropped • Ideas are evaluated against criteria; most are eliminated

8. Stage 3: Concept Development and Testing • Concept development creates a detailed version of the idea stated in meaningful consumer terms. • Concept testing asks target consumers to evaluate product concepts.

9. Stage 4: Marketing Strategy Development • The target market, product positioning, and sales, share, and profit goals for the first few years. • Product price, distribution, and marketing budget for the first year. • Long-run sales and profit goals and the marketing mix strategy.

10. Stage 5: Business Analysis • Sales, cost, and profit projections • Stage 6: Product Development • Prototype development and testing

11. Stage 7: Test Marketing • Standard test markets • Controlled test markets • Simulated test markets • Stage 8: Commercialization

12. Sales and Profits (Rs) Sales Profits Time Product Develop- ment Introduction Growth Maturity Decline Losses/ Investments (Rs) Product Life Cycle

13. Product Life Cycle Strategies • To say that a product has a life cycle asserts four things • Products have a limited life. • Product sales pass through distance stages, each posing different challenges, opportunities, and problems to the seller. • Profits rise and fall at different stages of the product life cycle. • Products require different marketing, financial, manufacturing, purchasing, and human resource strategies in each life-cycle stage.

14. Product Life-Cycle Patterns

15. Style, Fashion, and Fad Life Cycles

16. Marketing Strategies: Introduction Stage • The Pioneer Advantage • Inventor • Product pioneer • Market pioneer

18. Marketing Strategies: Growth Stage • Improve product quality and add new product features and improved styling • Add new models and flanker products • Enter new market segments • Increase distribution coverage and enter new distribution channels • Shift from product-awareness advertising to product-preference advertising • Lower prices to attract next layer of price-sensitive buyers

19. Marketing Strategies: Maturity Stage • Market Modification • Expand number of brand users by: • Converting nonusers • Entering new market segments • Winning competitors’ customers • Convince current users to increase usage by: • Using the product on more occasions • Using more of the product on each occasion • Using the product in new ways

20. Product modification • Quality improvement • Feature improvement • Marketing-Mix Modification • Prices • Distribution • Advertising • Sales promotion • Personal selling • Services

21. Marketing Strategies: Decline Stage • Increase firm’s investment (to dominate the market and strengthen its competitive position) • Maintain the firm’s investment level until the uncertainties about the industry are resolved. • Decrease the firm’s investment level selectively by dropping unprofitable customer groups, while simultaneously strengthening the firm’s investment in lucrative niches • Harvesting (“milking”) the firm’s investment to recover cash quickly • Divesting the business quickly by disposing of its assets as advantageously as possible.

22. ARIGATTO